Accrued Product Warranty

Obj. $5$

General Motors Company $($GM$)$ disclosed estimated product warranty payable for comparative years as follows:

A table shows estimated product warranty payable for two recent years for General Motors Company. All dollar amounts are given in millions. Current estimated product warranty payable is $$3,769$ for Current Year and $$3,048$ for Prior Year. Noncurrent estimated product warranty payable is $6,005$ for Current Year and $5,193$ for Prior Year. A single rule appears below $6,005$ and $5,193.$ Total is $$9,774$ for Current Year and $$8,241$ for Prior Year. A double rule appears below $$9,774$ and $$8,241.$ Enlarge Image

Assume that GM$$s sales were $$127,204$ million in the current year and that the total paid on warranty claims during the current year was $$3,249$ million.

Why are short$-$ and long$-$term estimated warranty liabilities separately disclosed?

Journalize the adjusting entry for the current year$$s product warranty expense.

What two conditions must be met in order for a product warranty liability to be reported in the financial statements?